US Trade Representative Robert Lighthizer (left) and the director of the White House National Trade Council, Peter Navarro, two of Washington's most outspoken critics of China, are heading to Beijing to talk trade. Photo: AFP / Mandel Ngan

Trump trade team visiting China just got bigger

Hardliners Navarro and Lighthizer will join Mnuchin on trip to Beijing next month

A team of high-ranking Trump administration officials is headed to China to talk trade, perhaps as soon as next week, in the first sign of a possible breakthrough as the countries stand precariously on the brink of an all-out trade war.

The stage was set when China matched, dollar-for-dollar, a threat from Washington of tariffs on US$50 billion worth of imported goods, after which President Donald Trump said the US would up the number to $150 billion. There has yet to be any clear indication from the White House about specific trade concessions China could provide. The tariffs, rather, have been framed as a general retaliation for unfair practices, including industrial policies China is employing to move up the manufacturing value chain.

While the US president said of prospects for reaching an agreement with Beijing that “we’ve got a very good chance of making a deal,” the make-up of the group going on the trip is reason enough to be skeptical. Treasury Secretary Steven Mnuchin originally saw himself making the trip solo as the natural counterpart to China’s US-trade point person, top Xi Jinping aide Liu He. But the delegation is now said to include the White House trade hawks, namely US Trade Representative Robert Lighthizer and economic adviser Peter Navarro. As a reminder, Navarro’s claim to fame, other than being widely derided for his misinformed views about China, is his book Death by China.

One question hanging over the trip is whether Mnuchin and hardliners Lighthizer and Navarro are on on the same page as to what is the minimum they are asking from China. The only consensus among observers is that market openings already announced are probably not enough for Trump to sell as a win ahead of midterm elections.

As we have written here, there is one big reason that a deal might eventually be made: Enacting the tariffs would be terrible policy. It would tank markets, disrupt supply chains, wreck the global economic recovery, and possibly do more collateral damage to US allies such as South Korea and Japan than it would do direct damage to China. Not to mention the backlash from US corporations, including Apple, which Trump will no doubt be hearing about when he meets with Tim Cook.

Looking forward to my meeting with Tim Cook of Apple. We will be talking about many things, including how the U.S. has been treated unfairly for many years, by many countries, on trade.

If a deal is made, one market analysis firm was quoted by The Wall Street Journal as saying, it won’t be quick. “Markets should make no mistake that this is the beginning of a negotiating process that will take many months, and is not a quick or easy negotiation with some definite end within weeks,” according to Evercore ISI.